All Forum Posts by: Cody Evans

Hi BP,

I am making my first moves onto picking a market to invest out of state in cash flowing properties. The down payment I will be using is 20k. I think having a trustworthy team of realtors, property management,etc is paramount. How do I even begin establishing a relationship with these people and what can I do ahead of time to pick a reliable teammate. Also what role is the most important and should find first for my team (realtor,property manager, lender, contractors etc)? If anyone could recommend any of these organizations to me it would be greatly appreciated as well.

@Ray Johnson The reason my parameters are set that way is because the BP Newbie webinar I attended suggested this guide:

http://www.biggerpockets.com/renewsblog/wp-content...

Brandon Turner, the author, states he expects at least 200 cash flow from each unit he has and I reckon that is a highly conservative estimate. I do not know about what the actual cash flow is for many properties but I absolutely expect at the least the going rate for the market I am in (and will negotiate the buying cost accordingly). The issue is I do not know what market I am in because I am searching outside of my state (Cali is too expensive). I am looking towards the Midwest. Is there a city/market I should check out for cash flowing multiplexes and what is the best way to find out the cash flows for the area? I suppose I just analyze deals and see what my average projected cash flow is for that market but I figure there is a far more efficient way such as asking a real estate agent or other investors in that area but I am unsure how to get into contact with those people since I am a beginner.

I am not looking to cash flow $800 a month; I just thought that was what I should be prepared to expect out of state. I would rather make the highest cash flows possible and I thought 4-plexes would be the investment vehicle to get me there: Would I still be better off starting with single or duplex considering what I have just told you?

Howdy right back at you @John Leavelle !!

Thanks for the great tip. I will go try it out right now. 

As far as my goals they can mostly be summed up by getting a 4-plex cash flowing at 800 a month for year one and then storing up capital by recycling those cash flows and adding in another 20k from my personal income which I will then use to buy another 4-plex the next year. I will continue buying as many 4-plexes as I can each year as my cash flow increases. I will then sell those to get my down payment for an apartment. I live in Cali and want to invest somewhere where properties are cheap but can cashflow. I am currently looking at properties in the Midwest to try and find my market. 

The issue being I don't know how to go about discovering what a good market looks like based on my goals. I know it is subjective and I need my own view of what makes a good market but are there rules of thumbs to give me a foundation to stand on? 

For example: Population and jobs must be increasing. The city should not rely on one industry for fear of a collapse if that industry becomes automated or goes away like in Detroit with the auto industry. It should be a location with x amount of property managers to choose from in case I have to change companies. Other people have told me and I know I should take what anyone says with a grain of salt since every investor has a different opinion/background but what  are some items I should add to this list while I am still coming up with my opinion on this matter?

Thank you very much for the help with searching 4-plexes.

Hi BP,

I am beginning my first few searches for 4-plexes. The issue is realtor.com and similar sites don't have an option that show me just 4-plexes. I want to have cash flow but not as expensive to purchase(less than 20k down). Is this realistic to get started with for a first investment?

Hi Vlad, 

I am a newbie that hasn't even invested in one property so take my advice with a grain of salt.

My logic here is that rents and economic downturn will be positively correlated with one another (Less people able to buy houses means more will be renting since no matter how irresponsible you are you still need a place to live at the end of the day). The main concern of any market where you want to set up a rental property is the population trends(more possible renters) and job outlook (is the city losing jobs which means a probable population decline as mentioned is important as well as less reliable tenants to choose from). I think the best you'll get in a market as a newbie is little no appreciation( those are the markets you'll be able to afford easier since appreciating markets will have risen so much in value by now that they'll be too expensive) and a strong cash flow so you can gain a ROI. This is the reason I am looking in the Midwest for properties. Reinvest all the cashflow you get from these properties to get more properties--> Repeat.

@Adam Crocker  I am newbie only a few months into my education and have to agree with @Aaron Klatt that they would just make the deal themselves. I even talked to my uncle about setting up a deal where he gets 75% since he has the money (meanwhile I do all the real work) and he says to me "I would do the deal myself then." After telling my aunt to nag him relentlessly (  I'm still the baby of the family at 22 so I get away with this stuff ;) ). I realize that my logic of him having a 0% return annually by not investing with me versus an 8% or higher return + good real estate experience is irrelevant because people are emotional. Even if you "know" what a good deal is; people for one reason or another are simply not going to go with the untested guy. I know this isn't the advice you want to hear because I didn't want to hear it either and I very well may be wrong, but you need to get your own finances in order so you can get at least $20,000 of your own money saved for an investment. 

Many want to live like Jordan Belfort with a gorgeous wife, unlimited beautiful women at a whim and all the travel time and pleasures we could imagine within a few short years but that just isn't realistic; if you want to be successful with your investments then YOU need to sacrifice and plan on coming up with your own capital. If you get lucky and find someone willing to give an untested man a lump sum to invest then please by all means send me a message with his name and number! 

Otherwise, we can discuss our youthful ambitions together. I am more than willing to learn the business with others while I am coming up. An important lesson I can give you and all investors is that wealth follows a Pareto distribution.  Experienced investors are probably familiar with this concept already: "It takes money to make money." 

https://www.youtube.com/watch?v=TcEWRykSgwE     is a great explanation of the Pareto distribution.

Hi BP,

I read a book about how to analyze properties and am feeling much more confident on how to identify the value of a property than before. I am now interested in crunching the numbers on some real properties and practicing some negotiations with brokers and owners. My issue now is how do I get that precious little thing called data from the properties I am interested in investigating? Am i just going to take others people's words for it? How do I determine the markets going cap rate? How do I figure out if the APOD the broker gives me is baloney?

These are a lot of questions and so don't feel pressured to answer them all or add additional questions in: Any help is appreciated in this area.

Thank you for reading

@Dan H.

That is an interesting claim. I am a new investor so I am curious--> How would you go about getting the raw information in order to determine the ROIs are roughly the same? For which Midwest cities do you want to do this challenge for?

Wow guys, thanks for an intro to this but my head is spinning! My takeaway as a guy who has not bought an income property yet is to make sure I am not neglegent (having inspectors search properties and then fixing them?), then getting homeowners insurance, no LLC until bigger, and then I am still confused about umbrella. I know it is open to opinion but can you help me and the other Noobs by grading this summary of the forum?

Thanks for all the help so far

@Sidney Kanell

I am interested in out of state as well and just looked at a forum regarding markets. It sounded much safer than pricey Cali where I live since they said you could get a house (Im exploring single and not just multi because of price) in the midwest for 75-100k and then went on to say something along the lines of being able to get lower quality for even less. I dont know about any specific markets or cities but if you find anything let me know. Im also checking you out houses called "turnkeys" that appear to mean they set you up with everything (management, good house,tenants) you may want to look into. I dont know of the validity of these turnkey companies but maybe someone else on the forum can fill you in.